PERTH: The Australian stocks posted its biggest rally in a month, rocketing back towards 6,000 points, as the likelihood of a local rate cut drove high-yielding financials to record highs.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index had rallied 108.5 points, or 1.86 per cent, to 5,950.8, while the broader All Ordinaries index had surged 104.5 points, or 1.8 per cent, to 5,912.5.
Overnight, the US central bank’s Federal Open Market Committee said that the labour market needed to improve before it raised the federal funds rate.
The dovish tone helped stoke a fire under Wall Street, pushing US stocks 1.2 per cent higher. The Australian dollar climbed almost two cents to US78c on the news as investors poured into the local currency.
The move in the Australian dollar saw financial markets price in a 100 per cent chance of a rate cut by the Reserve Bank of Australia in April or May, causing the local sharemarket to rocket towards 6,000 points as investors sought yield.
Before today, the local sharemarket had trended sideways since a pull-back following the RBA’s surprise decision to hold rates at its March board meeting.
